Competitive Connection
February 11, 2008
What others are saying . . .
A look ahead
The shaky economy clearly is sending ripples of distress through a jittery auto industry.
Toyota, Nissan and Honda — typically A-list performers — had lower sales last month. And the domestic industry is slashing production.
Of the six top-selling automakers, only General Motors had higher sales — up 2.6 percent from January 2007. By contrast, industry sales declined by 2.9 percent.
As the Detroit 3 struggle to stabilize sales, some suppliers and dealers are battling cash-flow crises.
And sprinkled among the bad news is some really bad news: Isuzu, which was in the forefront of the brewing SUV craze in the 1980s and early 1990s, is bailing out of the U.S. light-vehicle market.—Source: Automotive News, February 4, 2008
*********************
Then and Now
Driving habits contribute to climate debate
Congress and President Bush late last year agreed to order car makers to boost the average fuel efficiency of new vehicles to 35 miles per gallon by 2020.
Car makers and consumers will bear considerable costs to switch to a fleet of cars that meets the 35 mgp CAFE goal. But that might not result in a significant reduction in U.S. petroleum consumption or cut the CO2 we add to the atmosphere if we keep driving more and more miles.
From 1977 to 2001, the number of miles driven every year by Americans rose by 151% -- about five times faster than the growth in population, according to data compiled for a 2006 report to the U.S. Department of Transportation written by Stephen Polzin, a transportation researcher at the University of South Florida in Tampa.
The U.S. Department of Energy projects that miles driven will keep increasing in coming years. That means even though we'll be driving vehicles that slurp less petroleum per mile, carbon dioxide emissions could grow by as much as 41%, according to a report titled "Growing Cooler: The Evidence on Urban Development and Climate Change," published by the Urban Land Institute.—Source: The Wall Street Journal, February 4, 2008
*********************
A look at the competition
Market share trends
Ford's share dropped from 15.1% in 2006 to 14.2% last year, a decline that represents about half the production for an assembly factory. That was better than 2006, when the automaker lost nearly two full percentage points of retail market share.
Meanwhile, Toyota and Honda picked up most of Ford's decline in the U.S. market. And General Motors has stabilized its retail share, with about 22% of the U.S. market.
Tom Libby, senior director of industry analysis at the Power Information Network, a subsidiary of J.D. Power and Associates, called GM's performance impressive.
"For many, many years, we saw GM declining," he said. "GM is holding its own, and that's really a change."
Retail sales are those made directly to consumers, and they exclude fleet sales to rental car companies, businesses and governments, which are typically sold at a discount. Industry experts view retail sales as one of the best measures of demand and future financial performance, because they are generally more profitable.
Overall, the numbers also showed that Detroit's automakers sold fewer than half the cars and trucks bought in American showrooms last year, for the second year in a row.—Source: Detroit Free Press, February 1, 2008
*********************
A look at the competition
The impact of trucks
Sales of big pickups, among the most profitable vehicles for the Detroit Three, fell for the third successive year in 2007 amid the housing crisis and high gas prices.
It is hard to exaggerate how important large pickup trucks are to Chrysler, Ford and GM. They are "the earnings engine of the Big Three," said Joseph Phillippi, a long-time industry analyst who heads Auto Trends Consulting Inc. in Short Hills, N.J.
Each sale of a Dodge Ram, Ford F-series or GMC Sierra generates between $8,000 and $10,000 in variable gross profit, Mr. Phillippi figures. They represent almost 30 per cent of Ford's annual sales, 21 per cent of GM's and 17 per cent of Chrysler's. Roughly 15 percent of the assembly plant jobs at those companies' factories in the United States and Canada are dedicated to cranking out the vehicles.
The bad news is that J.D. Power is forecasting another 2-percent decline in pickup truck sales this year and no rebound until 2009.—Source: Bloomberg, February 1, 2008
*********************
A look at the competition
Honda is upbeat
Honda sees a brighter forecast for 2008.
While some U.S. auto makers are thinking about ways to enhance plant utilization rates by closing factories and buying out workers, Honda is adding a new assembly facility this year and is thinking about how to shoehorn more new products into Honda’s six other fully capacitized factories in North America.
“We’ve had very consistent, steady growth, year after year,” CEO Takeo Fukui says. “At the end of the day, it’s all about consistency with Honda.”
Honda’s automotive plants produced a record number of vehicles in 2007 in the U.S. (1,015,462 units) and in North America (1,432,731).
Four of the auto maker’s six North American auto plants turned in all-time production records last year. It also was the third-straight record result for Honda in the U.S. and North America, as well as the first time that U.S. auto production exceeded 1 million units in a single year.
Honda of America’s seventh auto plant starts production later this year in Greensburg, IN.
Honda exported about 35,000 vehicles in 2007 from its factories in Ohio and Alabama to numerous countries outside the U.S. and Canada.—Source: wardsauto.com, January 31, 2008
*********************
To read previous editions of the Competitive Connection or to access other information about manufacturing and labor at GM, visit http://www.gmmanufacturing.info